Wednesday, August 25, 2010

Dire Prediction Derailed

He wasn't lying or even manipulative, just wrong. And careless.

On Monday, Rush Limbaugh remarked

This is the Wall Street Journal: "U.S. Saw Drill Ban Killing Many Jobs." The Obama administration knew that their moratorium is gonna kill at least 23,000 jobs; they did it anyway. This we knew, but the Wall Street Journal here is making it official.

Limbaugh's website linked to the article in the WSJ, in which Stephen Power and Leslie Eaton wrote

Senior Obama administration officials concluded the federal moratorium on deepwater oil drilling would cost roughly 23,000 jobs, but went ahead with the ban because they didn't trust the industry's safety equipment and the government's own inspection process, according to previously undisclosed documents.

These documents

show the new top regulator or offshore oil exploration, Michael Bromwich, told Interior Secretary Ken Salazar that a six-month deepwater-drilling halt would result in "lost direct employment" affecting approximately 9,450 workers and "lost jobs from indirect and induced effects" affecting about 13,797 more. The July 10 memo cited an analysis by Mr. Bromwich's agency that assumed direct employment on affected rigs would "resume normally once the rigs resume operations."

Hooray for Rush Limbaugh! He has, uncharacteristically, favorably referred to a report from the Obama Administration. Unfortunately, this is one time that he should not have done so, the prognostication having been inaccurate. Three days after the WSJ article appeared, The New York Times reported

When the Obama administration called a halt to virtually all deepwater drilling activity in the Gulf of Mexico after the Deepwater Horizon blowout and fire in April, oil executives, economists and local officials complained that the six-month moratorium would cost thousands of jobs and billions of dollars in lost revenue.

Oil supply firms went to court to have the moratorium overturned, calling it illegal and warning that it would exacerbate the nation’s economic woes, lead to oil shortages and cause an exodus of drilling rigs from the gulf to other fields around the world. Two federal courts agreed.

Yet the worst of those forecasts has failed to materialize, as companies wait to see how long the moratorium will last before making critical decisions on spending cuts and layoffs. Unemployment claims related to the oil industry along the Gulf Coast have been in the hundreds, not the thousands, and while oil production from the gulf is down because of the drilling halt, supplies from the region are expected to rebound in future years. Only 2 of the 33 deepwater rigs operating in the gulf before the BP rig exploded have left for other fields.

While it is too early to gauge the long-term environmental or economic effects of the release of 4.9 million barrels of oil into the gulf, it now appears that the direst predictions about the moratorium will not be borne out. Even the government’s estimate of the impact of the drilling pause — 23,000 lost jobs and $10.2 billion in economic damage — is proving to be too pessimistic.


In an unintended and unexpected benefit, Times writers John M. Broder and Clifford Krause found

Oil companies used the enforced suspension to service and upgrade their drilling equipment, keeping shipyards and service companies busy. Drilling firms have kept most of their workers, knowing that if they let them go it will be hard to field experienced teams when the moratorium is lifted. Oil companies have shifted operations to onshore wells, saving industry jobs.

Consequently

The moratorium is likely to have a modest immediate effect on domestic oil production. The Energy Department projects that the moratorium will bring a decline of 120,000 barrels a day in deepwater production in 2011, but domestic daily crude oil production is still expected to increase by 30,000 barrels a day, to 5.46 million barrels.

Other nations, unencumbered by legislators determined to deregulate industry to protect its corporate benefactors, appear to have implemented sensible regulation, wherein

Britain has stepped up inspections of offshore rigs. Brazil has announced a safety review that will take a year to complete before it makes any regulatory changes related to its fast-growing offshore drilling industry. Angola has increased inspections.

Rush cries The Sky Is Falling! The Sky Is Falling! But the sky isn't falling, notwithstanding what the GOP and the oil industry (pardon the redundancy) are claiming. Limbaugh, as the leader of the Republican Party, has led the chorus but in relying on the piece in The Wall Street Journal, was probably unaware of the complete picture. After all, aside from manipulating his audience and tirelessly carrying the torch for the wealthy against the middle class, Rush Limbaugh is, periodically, simply uninformed.



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